In the United States, the Federal Direct Student Loan Program (FDLP) includes consolidation loans that allow students to consolidate Stafford Loans, PLUS Loans, and Federal Perkins Loans into one single debt.This results in reduced monthly repayments and a longer term for the loan.
The Federal Loan Consolidation Program was created in 1986.
In 1998, the United States Congress changed the interest rate to the aforementioned fixed rate weighted mean, effective February 1, 1999.
Your federal loans will move to 1 new consolidated loan under 1 servicer.
But your nonfederal education loan—such as the Vermont Advantage Loan—will remain with its current lender.
The fixed interest rate is calculated as the weighted average of the interest rates of the loans being consolidated, assigning relative weights according to the amounts borrowed, rounded up to the nearest 0.125%, and capped at 8.25%.